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Financial Growth and Recovery in a time of COVID 19
As your trusted business and tax advisor, we have prepared a short list of suggestions that may help you weather the difficult economy:
File your taxes
1. Get access to any available tax refunds
2. Update the information the IRS needs (mailing address, filing status, number of dependents) to send your stimulus payment
3. Get useful information to adjust your form W4
4. Calculate your SEP contribution allowed for 2019. Make the contribution now and buy low. You can also make your 2020 contribution at this time.
Reduce payroll burdens using the following methods:
1. S Corp owners can stop/skip/reduce the salary of owners
2. The IRS allows 401k plans to adjust or eliminate the Employer match at any time with reasonable notice. This does not apply to Safe Harbor plans.
3. You may be able to cancel your Simple plan which will allow you to eliminate a match. (speak to your financial advisors)
4. Allow employees to work reduced hours from home.
5. Encourage employees who are eligible and not essential to ongoing operations to claim unemployment
6. Claim unemployment yourself. The states are relaxing the requirements to file an unemployment claim. If you are not working because of COVID 19, file unemployment immediately.
7. Make hard decisions; for instance, stop payroll on non-essential employees.
8. Let your trusted employees help you make the hard calls. If they are getting paid but you are not, they may be willing to accept a pay reduction or reduction of retirement benefits.
Protect your assets
1. Call your financial advisor (let us know if we can help you find someone you can trust)
2. If you are withdrawing your RMD monthly, stop. We expect the economy to rebound (at least some) by the end of the year. Pause the RMD until December when the withdrawals aren’t so costly due to low market prices.
3. Continue contributing to your retirement accounts, and even increase if possible...each contribution is taking advantage of low priced investments.
4. Reposition your accounts.
a. For non-retirement accounts: harvest your losses for tax purposes and reposition in stocks that are underpriced and expected to rebound quickly.
b. For retirement accounts: rebalance your portfolio to properly reallocate into stocks, which are underpriced and expected to rebound quickly.
5. Convert your traditional retirement accounts to Roth accounts while values are low, lessening the tax burden of the conversion while also positioning your account to reap the tax-free rewards
6. Consider front-loading your 401k plan employee contribution. Increase your contribution now rather than contributing evenly over the year. This will allow you buy more while market prices are low.
1. Keep your financial statements up to date and keep a close eye on your margins each month.
2. Apply for a loan. Small business owners in all states are eligible to apply for a low-interest disaster loan. Visit disasterloan.sba.gov
3. Call your banker and ask for a reduced interest rate or deferred payments.
4. Call your credit card company and ask for a reduced interest rate.
5. Adjust company retirement matches.
6. Adjust your 1st and 2nd quarter estimated taxes based upon 2020 projections. Contact us mid-year to recalculate your estimates.
7. Keep your income tax funds in the bank--hold onto your money as long as you can. The 2019 payment and first and second quarter estimates are deferred until July 15.
8. If you are laid off, file for unemployment now. Some states are waiving the waiting period and extending the amount of time you can receive benefits.
KS Dept of Labor https://www.dol.ks.gov/covid19response
MO Dept of Labor https://labor.mo.gov/des
US Dept of Labor https://www.dol.gov/coronavirus
SBA DisasterResponse https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
IRS Simple Termination https://www.irs.gov/retirement-plans/terminating-a-simple-ira-plan